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Blake Morgan news, updates and analysis | Page 1 of 1

The merger between Blake Lapthorn and Morgan Cole went live on 1 July to create Blake Morgan. The firm’s managing partner, Walter Cha, talks competition and strategy.

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How did the merger come about and what are the reasons behind it?

We both acted for common clients and a lot of people were known to each other. We have a partnership at Blake Lapthorn and Morgan Cole that are ambitious and want to see themselves grow rather than wait for other things to impact on them.

The US top 5 Global 100 firm has promoted eleven lawyers in total, up three from last year, with the bulk of the promotions falling in the US: three in New York; one in Los Angeles; one in Washington DC; and one in Chicago. The remaining two were in Hong Kong.

The promotions were spread across various practice groups, including two in cross-border investigations and litigation, two in mergers and acquisitions, and one each in SEC enforcement and tax controversy. This year the firm made up just one female.

After a dip last year, the number of promotions takes the 1,735-lawyer firm back to 2012 levels, when it also made up eleven lawyers.

The promotions come as a number of US firms have considerably swelled their partnership ranks in London, in some cases promoting an equivalent number of City partners to the Magic Circle firms. In the most recent rounds Latham & Watkins promoted four partners in its City base, White & Case promoted five and Kirkland & Ellis promoted seven London partners.

Separately, Morgan Cole, which will shortly merge with Blake Lapthorn, has promoted two partners, with succession wills and tax lawyer James Greig being made up in Oxford and commercial lawyer Jason Richards who will work across the firm’s Oxford and Cardiff offices.

Morgan Cole chairman Bruce Potter said: ‘As a firm, we recognise that the success of our business is totally dependent upon attracting and developing the very best people. Both James and Jason have impressive track records and are known for their exemplary approach to client work. All of those who have been promoted very much deserve their success.’

The promotions come ahead of the firm’s merger with Blake Lapthorn, set to go ahead on 1 July to form Blake Morgan, a 120-partner firm with a joint revenue of £72m, projecting it into the top 50 UK firms.

Despite talks over the giant south-east combination between Blake Lapthorn, Boyes Turner and Morgan Cole to create a £100m firm falling through late last year with Boyes Turner withdrawing, Blake Lapthorn and Morgan Cole last month announced the two will merge on 1 July to form Blake Morgan, a 120-partner firm with a joint revenue of £72m.

While talks of the giant south-east combination between Blake Lapthorn, Boyes Turner and Morgan Cole to create a £100m firm fell through late last year with Boyes Turner withdrawing, Blake Lapthorn and Morgan Cole have announced the two will merge on 1 July to form Blake Morgan, a 120-partner firm with a joint revenue of £72m.

The combined firm will have a strong showing in the south of England and Wales across seven locations: London, Cardiff, Reading, Southampton, Oxford, Portsmouth and Swansea.

Walter Cha (pictured), managing partner at Blake Lapthorn who will become managing partner of the combined firm, said: ‘We’re excited by what the new firm can achieve; with a broader and deeper capability across the sectors that the two firms are already known for such as regulatory, public sector, development and construction and banking and finance. Our combination with Morgan Cole positions us as a major player in Wales and southern England and will provide us with a strong platform to invest in London and the Thames Valley.’

Elizabeth Carr, managing partner at Morgan Cole, added: ‘We have been looking for the right partner to enable us to grow our business…We have an ambitious strategy to deliver the right capability in the most efficient and effective way. We are enthused by what the new firm can deliver in terms of investment in legal talent, training and technology to benefit all our clients.’

Both firms have found the post-Lehman years particularly challenging. Top 80 firm Morgan Cole’s latest LLP filings showed its highest paid equity member took home almost 42% less at the end of the last financial year – £162,000 compared to £278,000 in 2011/12. The lowest paid equity partner also took home 35% less; £135,000 compared to £206,000 the year before.

The firm’s revenue was down 8% from £36.6m to £33.7m, as profit dropped over 32% from £10.1m to £6.9m, which the Cardiff-based firm attributed to a one-off property charge which has now been resolved.

Blake Lapthorn, on the other hand, posted flat revenues of £45.6m in 2013, but overall its turnover was down 10% on the figure it posted in 2008.

The merger discussions involved a number of consultants and Alan Hodgart of Hodgart Associates said: ‘The consolidation in the legal market is continuing and firms need to decide which way to go: to scale up or become more specialised. The merger of Blake Lapthorn and Morgan Cole brings together two businesses that are very complementary in strategic terms and presents a new competitive force in the UK market.’

On merging with Archibald Campbell in October 2012, Shoosmiths acquired £1.77m of net assets, £1.47m of which was paid as a cash consideration, the UK top 45 firm’s first-ever LLP accounts show. The remaining £300,000 was collected by the end of the financial year.

The 418-lawyer firm, which incorporated as an LLP on 4 May 2012, with the business of its general partnership transferring to the LLP on 6 August 2012, saw its bank loans increase by 18% from £6.5m in 2011/12 to £7.7m last year, while other loans also increased from £1.7m to £2.6m.

Shoosmiths’ highest paid partner saw their earnings drop 25% from £375,000 in 2011/12 to £281,000 last year, as audited accounts also showed a drop in net profit of 12% during that period from £12.5m to £11m, although turnover increased 3.4% from £84m to £86.9m.

Elsewhere, at UK top 80 firm Morgan Cole the highest paid member of the equity took home almost 42% less at the end of the last financial year – £162,000 compared to £278,000 in 2011/12. The lowest paid equity partner also took home 35% less; £135,000 compared to £206,000 the year before.

This came as revenue dipped 8% from £36.6m to £33.7m, as profit dropped over 32% from £10.1m to £6.9m, which the Cardiff-based firm attributed to a one-off property charge which has now been resolved.

Meanwhile, Maclays has significantly reduced its borrowing despite seeing revenue and profits drop, with turnover down 12.6% to £40.8m last year compared to £46.7m at the end of 2011/12. Net profit was down 21.8% from £13.3m to £10.4m as the firm also reduced its headcount by 22 fee-earners and staff, as staff costs were cut 7.2% from £18m to £16.7m.

The Scottish market has been notoriously difficult but Maclays, which has seen its revenue drop by over 30% from its 2008 high of £61.1m, has nonetheless shaved its bank loan from just below £2m to around £1.3m in the last financial year.

The highest-earning partner took home £292,000, a 26% cut on £397,000 the year before.

The picture could not be more different at top 50 UK firm Charles Russell which, despite seeing turnover and profit increase only slightly, saw its highest paid partner take home £600,000, up from £366,000 in 2011/12, a 64% increase.

The 310-lawyer firm continues to pay off an £11m term loan taken in 2009 to refurbish its City offices, reducing its outstanding borrowings to £6.6m last year.

It would create a south-east giant with combined revenues approaching £100m but any potential tie-up between Blake Lapthorn, Boyes Turner and Morgan Cole could require some considerable rationalisation.

The firms are currently in the very early stages in merger talks, potentially creating a firm with offices across the Midlands, south of England and Wales, employing over 450 lawyers.

A statement from Blake Lapthorn managing partner Walter Cha said: ‘A merger is one of the many options we have been exploring and Morgan Cole and Boyes Turner – both excellent firms – have been among those we have talked to. Discussions have not progressed beyond first stages at this juncture and it is too early to say whether talks will continue with either of the firms or indeed others.’

The union would make sense at a fundamental level as both Blake Lapthorn and Morgan Cole have found the post-Lehman years particularly difficult and while Boyes Turner has developed a strong local practice in Reading, the union would allow it to be part of a larger national offering.

Blake Lapthorn chairman Stephen Murfitt said: ‘In common with what other firms are doing, we are looking to build a competitive advantage. The market will consolidate. A number of firms are looking at mergers at means of improving their competitive advantage and we are no different. As a consequence, we are bound to talk to other firms in order to see whether we can achieve a cultural mix. If this merger were to happen, it will consolidate our position in Reading and Thames Valley, and we would also have a presence in Wales.’

But the Thames Valley heartland of the new firm would be saturated, with Morgan Cole and Blake Lapthorn both having offices in Oxford, while Boyes Turner’s Reading base is also home to another local office for Morgan Cole.

Although the smallest firm of the three and the only one not to feature in the Legal Business 100, Boyes Turner has been the strongest performer financially this year, with revenues up 4% to £14.7m in 2012/13. In some senses it would be taking the biggest gamble in joining up with two larger local rivals, both of which have had their financial problems in recently.

While turnover is up 5% on 2008, Morgan Cole saw its turnover tumble 8% this year to £33.7m, while profit per lawyer fell 38% to £26,000, with managing partner Elizabeth Carr telling Legal Business this summer that the fall in revenues were expected because of the costs involved in refocusing the firm over the course of the previous year.

Meanwhile Blake Lapthorn – no stranger to mergers after acquiring Linnells in Oxford in 2003 and Tarlo Lyons in the City in 2006, posted flat revenues this year of £45.6m but overall its turnover is down 10% on the figure it posted in 2008.

Nonetheless, with the south and Welsh regional legal markets squeezed hard by the recurring problem of very similar firms offering similar services with no perceptible variation in quality, any combination of practice area strength and consolidation of costs would be particularly welcome. Morgan Cole and Blake Lapthorn are also under pressure from strategic moves made by national rivals this year, particularly the creation of Bond Dickinson and Mills & Reeve’s and TLT’s moves into Manchester.